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Dieselgate: Volkswagen to pay €830 million settlement to German consumers

Five years after the Volkswagen emissions scandal began, the automaker has reached a settlement with Germany's consumer federation. The amount is a fraction of what the company was ordered to pay American consumers.

Volkswagen reached a "comprehensive agreement" with the German consumer federation VZBV regarding a compensation settlement over the company's 2015 emission's scandal, a court in the central German city of Braunschweig announced on Friday.

Some 260,000 German customers who were affected by the affair will receive between €1,350 and €6,257 ($1,484 and $6,879), depending on the model and age of the car. VW plans to pay a total of €830 million in compensation — significantly less than the $15.3 billion a United States judge ordered the company to pay American consumers.

The consumers can then decide to either accept the settlement or continue to fight for more money in individual lawsuits. People who bought their cars after December 31, 2015 — months after the scandal began — will not be compensated.

In addition, Volkswagen will take on the full costs for the settlement and the legal advisers for the consumers. An ombudsman office will be set up to settle possible disputes.

The VZBV, who filed the class action lawsuit against VW in September, said after the settlement was announced that its action for declaratory judgment will now be terminated.

"The VZBV has argued for more. But in the context of the difficult negotiations, the result is the maximum achievable," said VZBV board member Klaus Müller.

What is Dieselgate?

The 2015 Volkswagen emissions scandal, dubbed "Dieselgate," was one of the biggest car scandals in history, affecting the automotive industry on a global scale.

In September 2015, Volkswagen shared with the United States Environment Protection Agency behind closed doors that they had installed software in 11 million vehicles worldwide that allowed it to cheat emissions tests. Volkswagen's then-CEO Martin Winterkorn tendered his resignation days later, though he retained other positions within Volkswagen Group.

Dieselgate: A timeline

The disaster unfolds — September 2015

About two weeks after Volkswagen admitted behind closed doors to US environmental regulators that it had installed cheating software in some 11 million of its diesel vehicles worldwide, the Environmental Protection Agency shared that information with the public. It was September 18, 2015. The ensuing crisis would eventually take a few unexpected turns.

Dieselgate: A timeline

The boss must go, long live the boss — September 2015

Volkswagen's then-CEO Martin Winterkorn (above) had little choice but to step down several days after news of the scandal broke. In September 2015, he tendered his resignation, but retained his other posts within the Volkswagen Group. Winterkorn's successor was Matthias Müller. Until taking the reins at VW, Müller had been the chairman at Porsche, a VW subsidiary.

Dieselgate: A timeline

Raiding headquarters — October 2015

Regulators in the US weren't the only ones investigating VW. Authorities in Lower Saxony, the German state in which VW is based, were also scrutinizing the company. On October 8 2015, state prosecutors raided VW's headquarters along with several other corporate locations.

Dieselgate: A timeline

Hell breaks loose — January 2016

On January 4, 2016, the US government filed a lawsuit against VW in Detroit, accusing the German automaker of fraud and violations of American climate protection regulations. The lawsuit sought up to $46 billion for violations of the Clean Air Act.

Dieselgate: A timeline

Quit or forced out? — March 2016

In March 2016, the head of VW in the US, Michael Horn, resigned. In the initial days and weeks after the scandal broke, he was the one US authorities turned to for information. He issued an official apology on behalf of the automaker, asking for the public's forgiveness.

Dieselgate: A timeline

Settlement — October 2016

On October 25 2016, a US judge approved a final settlement that would have VW pay $15.3 billion. In addition, affected cars would be retrofitted with better, non-deceptive hardware and software, or else VW would buy them back completely from customers.

Dieselgate: A timeline

Imitators — July 2017

When dieselgate first emerged in 2015, analysts said it was likely other car makers were also cheating tests. But it wasn't until 2017 that other companies were targeted in probes. In July, German authorities launched investigations into luxury car makers Porsche and Daimler for allegedly cheating emissions tests. Others, such as Audi and Chrysler, have also been hit by similar allegations.

Dieselgate: A timeline

Public still supportive — December 2017

Despite dieselgate, VW has managed to keep the emissions scandal from utterly tarnishing its image. According to several polls, between 55 to 67 percent of Germans continue to trust the automaker. In the US, polls show that roughly 50 percent still believe the German company produces worthwhile vehicles.

Dieselgate: A timeline

Fuming over monkeys — January 2018

In late January, however, VW suffered another heavy blow over reports that the company experimented on monkeys and made the animals inhale diesel fumes. To make matters worse, a separate experiment that had humans inhale relatively harmless nitrogen dioxide was revealed at the same time. Some media wrongly interpreted this to mean humans were also inhaling toxic fumes.

Dieselgate: A timeline

Canadian court demands millions — January 2020

Years after the scandal that caused Volkswagen to pay CAN$2.4 billion (US$1.83 billion), a court in Toronto order a further fine of CAN$196.5 million. Volkswagen pleaded guilty of violating in environmental laws. Prosecutor Tom Lemon noted that the fine was "26 times the highest fine ever for a Canadian environmental offence."